By Marius Toime of Berwin Leighton Paisner

Chimed Saikhanbileg, Mongolia’s incoming prime minister, must do more than simply continue the policies of his predecessor, ousted amid accusations of economic mismanagement and corruption.

His election by parliament last week, after Norov Altankhuyag was removed by a vote of no confidence, leaves big question marks over whether he can bring about real change. The opposition People’s Party boycotted his election, fearing that he will let the country drift without fresh leadership and put investment, jobs and income at risk. Read more

** FT News **

* Wall Street high fails to spur Asia rally | But China equities on pace for 6th consecutive daily rise

* Merkel offers Russia trade olive branch | German chancellor aims to ease tensions amid claims her Ukraine policy is too tough Read more

By Monica Baumgarten de Bolle of the Woodrow Wilson Center for International Scholars

President Dilma Rousseff’s soon to be announced new finance minister may mark an important shift in Brazil’s faltering macroeconomic framework: From the ill-fated experimentalism that culminated in the so-called “New Economic Matrix”, brain child of Minister Guido Mantega, to newfound orthodoxy. From a failed model based more on ideology than economics to more rational policymaking, this is what one should expect from Joaquim Levy’s appointment, widely expected to be confirmed on Thursday. How long it all lasts is another matter altogether. Read more

It was close, but they didn’t make it. The political fixers of Brazil’s government had hoped to push through a bill on Wednesday that would have removed its obligation to meet a target of a primary fiscal surplus (before debt payments) of 1.9 per cent of GDP in this year’s budget.

The hope was that the bill would have been passed in time for the expected announcement on Thursday of a new economics team, widely tipped to be led by Joaquim Levy as finance minister. Success would, in a way, have swept out the old team’s jiggery pokery over public accounts before ushering in the new brooms of team Levy. Now it will just have to be done after the event. Read more

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How far to trust a politician? Often a tricky subject – especially in a country like Mexico, where impunity is rife and many elected representatives appear still to live by the maxim of the late Carlos Hank González, an influential politician and businessman (with a statue to his honour in the city of Toluca), namely: “A politician who is poor is a poor politician.” Read more

The IMF has endorsed Egypt’s economic reforms at the conclusion of an Article IV mission, giving Cairo a much-needed boost as it prepares to host a major investment conference in March aimed at attracting billions of dollars into large projects in a range of sectors.

“Policies implemented so far, along with a return of confidence, are starting to produce a turnaround in economic activity and investment,” said Chris Jarvis, who led the IMF mission. “We now project that growth will reach 3.8 per cent in [the financial year] 2014/2015.” Read more

An index of confidence among Brazilian manufacturers suggests things aren’t as grim as all that, after an index of consumer confidence published on Tuesday hit a post-crisis low.

But the uptick in the manufacturing confidence index produced by the Fundação Getulio Vargas – the same academic institution that prepared the consumer index – does not bear close inspection.

Source: FGV/IBRE. Click to enlarge

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The Bucharest Stock Exchange is the largest bourse in post-communist south-east Europe and for spells in the past decade has been ranked as one of the world’s best-performing.

Now the exchange and its new largest shareholder have set their sights on becoming a financial hub for the region, eyeing MSCI emerging-market status within three years, substantial increases in capitalisation, and greater participation by foreign investors and pension funds. Read more

** FT News **

* China ‘fines’ Microsoft $140m in back tax | US software group says payment is a ‘bilateral advanced pricing agreement’

* Carlyle invests in South Africa | Buyout house expands presence in the continent by taking stake in Johannesburg tyre and parts retailer Read more

By Gordon French, HSBC

If Asia’s emerging markets are to avoid the middle income trap, they need to create foundations for the next phase of growth: they need to invest in infrastructure.

In the early stages of development, moving a worker from the land to a factory quadruples their value-added contribution to the economy on average. Much of Asia’s extraordinary growth to date has been underwritten by this one-off transition, but the windfall gains of rapid industrialisation are starting to decline and if the region is to continue on the road to prosperity it needs to find ways to boost productivity and encourage new economic activity. Read more

** FT News **

* France suspends Russian warship delivery | Hollande toughens his stance over the controversial arms sale

* India’s new gym generation | Demand for working out is rising rapidly in Asia’s third-largest economy Read more

Portfolio flows to emerging markets rebounded in November after several months of weakness, according to the latest EM Portfolio Flows Tracker from the Institute of International Finance. Flows for the month were estimated at $25.5bn, consisting of $8.8bn to bonds and $16.7bn to equities, the IIF said.

Click to enlarge

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Bahrain, Angola, Ecuador and Venezuela rank as the emerging markets (EM) most vulnerable to a downgrade in their sovereign credit ratings if oil prices do not recover in 2015, Fitch Ratings said in a report published on Tuesday.

With benchmark Brent crude prices close to $80 a barrel, down from $115 a barrel in mid-June, the revenues of all oil producers are under pressure. But due to differing levels of fiscal reliance on oil income, the speed of deterioration in domestic budgetary conditions varies sharply among EM producers. Read more

** FT News **

* US seeks documents from Brazil’s Petrobras | The US Securities and Exchange Commission has issued a subpoena to Brazil’s Petrobras.

* China fears opposition on climate talks | Warning that resistance could hamper any deal comes ahead of talks in Lima Read more

South Korea’s small and medium sized enterprises have been losing competitiveness over the past several years, mirroring the declining power of its big export-based conglomerates called chaebol that have driven the country’s economic growth.

A report by the Korea Small Business Institute suggests businesses have failed to take advantage of government programmes to support SMEs and have shown a lack of innovation as they struggle to prosper in a sagging economy. Read more